FCC Rejects Ameritech’s Bid for Long-Distance

Federal regulators on Tuesday rejected Ameritech Corp.’s request to provide long-distance phone service, thwarting the carrier’s bid to be the first Baby Bell to offer such service since the 1984 breakup of AT&T; Corp.

But in a partial victory for Ameritech, the Federal Communications Commission provided a detailed road map for how the Chicago-based carrier and other regional Bells can enter the $80-billion long-distance business.

In a 200-page opinion, the FCC said Ameritech had not yet fully opened its local phone business in Michigan to long-distance companies and others wanting to offer their own brand of local service. It did say, however, that the company has made progress.

Ameritech responded that it will review the FCC order.

“Going forward, we will take whatever steps are necessary to resolve this issue properly,” Richard Notebaert, Ameritech chairman and chief executive, said in a statement.

“We will study the order when it’s issued, we will work vigorously to fulfill any remaining requirements, and then we’ll refile to offer long-distance--in Michigan as well as the other four states we serve,” he said.

Ameritech had sought permission to offer long-distance dialing to Michigan residents, one of five Midwestern states in which the carrier provides local phone service.

Ameritech shares fell 25 cents to close at $66.50 on the New York Stock Exchange. The FCC announcement came after the markets closed.

Under the Telecommunications Act passed last year, the Bells won the right to offer long-distance service to local customers. The carriers must first prove that they have opened their local phone networks to new competitors.

The regional companies had been barred from getting into the long-distance business after they were spun off during the AT&T; breakup.

“Until AT&T;, MCI and Sprint are actively selling local service without complaining of competitive roadblocks, Ameritech and the other Baby Bells won’t be able to get into long-distance,” said analyst Jeffrey Kagan of Kagan Telecom Associates in Atlanta.

“That’s the message that seems to be coming from regulators between the lines.”

In its decision, the FCC said Ameritech must give competitors better access to its huge computer system that is used to process billing, repair requests and new orders.

The FCC also said the company failed to show it was hooking up rivals’ customers to its own local network speedily enough. In addition, the agency said the carrier must give competitors better access to its 911 emergency system.

Ameritech and the other four Bells are sure to pore over the details of the decision to get a better idea of what it takes to win the FCC’s blessing.

“Any [Baby Bell] that wishes to take the steps necessary to follow the road map will have the opportunity to enter the long-distance market,” FCC Chairman Reed Hundt said, adding that the Bells must “reliably, practically and fully” open their local markets to rivals.

Notebaert of Ameritech said his first choice would have been a “yes” from the FCC. “You would have heard the corks pop,” he told reporters in a conference call.

But he added, “The FCC has given Ameritech and the whole industry what it needed all along: a road map to competition.”

The FCC in June turned down SBC Communications Inc.’s application to offer long-distance service in Oklahoma, saying the San Antonio-based Baby Bell had not met the telecom act requirements.

But FCC officials have said they considered the SBC request to be less than serious and offered little guidance for how to get the agency’s green light.

Regulators and top lawmakers have grown increasingly frustrated over the pace of new competition after promising consumers hordes of choices following passage of the sweeping telecommunications law.

Hundt last week conceded that the law was not working and urged Congress to change it to pry open the $100-billion local phone market controlled by the Bells.

Ameritech and other regional phone companies are pressing to enter the $70-billion-a-year long-distance market because they need sales from long-distance service to offset the loss of customers under anticipated competition for local service.